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Bitcoin ETF Filings Show Suspiciously Low Fees as Cryptocurrency Price Wars Escalate

2 mins
Updated by Ryan James
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In Brief

  • Bitcoin ETFs fee proposals see a dramatic drop with ARK Invest, BlackRock, and VanEck reducing fees to under 0.4% in filings today.
  • Crypto influencer Lark Davis is certain the low fees will drive volumes into the crypto space this week and boost Bitcoin's price.
  • Some crypto commentators on X have pointed out that the fees the ETF companies charge could motivate Coinbase to lower its charges.
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The flurry of amendments to S-1 filings for Bitcoin ETFs has seen fee proposals drop dramatically. ARK Invest, BlackRock, and VanEck have all reduced their fees to under 0.4%, with BlackRock waiving a portion of its charges for the first 12 months.

ARK Invest is charging a fee of 0.25% of the client’s Bitcoin holdings, Grayscale dropped its fee from 2% to 1.5%, and BlackRock is charging 0.3%. Bitwise Asset Management and VanEck tabled the lowest long-term annual fees of 0.24% and 0.25%.

Low Cryptocurrency ETF Fees Might Be Risky

According to the CEO of Custodia Bank, Caitlin Long, low fees could be masking risky securities lending. In such transactions, a third party pays the owners of shares and bonds a borrowing fee and collateral in exchange for temporary possession of a security.

Read more: Best Multi Cryptocurrency Wallet To Use in 2024

“When fees are lower than costs, please please please ask yourself how the asset manager is making money managing the fund. With no-fee funds, the answer is usually securities lending—a practice that can pose a lot of hidden risk to investors. What‘s really going on here?” Long stated.

Long is a proponent of crypto self-custody. She pioneered laws defining crypto possession in Wyoming.

However, the fee competition will likely drive volumes into the crypto space and feed institutional demand. Crypto influencer Lark Davis believes the low fees will catapult Bitcoin’s price.

“A wave of capital will flow into Bitcoin. Most likely starting this week,” Davis stated.

Cryptocurrency ETF Price War Has Winners

Notable industry players like Grayscale CEO Michael Sonnenshein expect the SEC to approve multiple exchange-traded funds (ETF) simultaneously. The competition will likely benefit institutional investors, who, up to this point, had to pay high fees to get access to Grayscale’s Bitcoin Trust.

Cryptocurrency ETF price
Bitcoin ETF Price Competition | Source: James Seyffart

Some commentators on X have remarked that the ETF fees are lower than Coinbase’s retail fees. As a result, the exchange may need to consider reductions to compete with exchange-traded products.

However, exchanges like Coinbase mostly serve a different customer base. The company’s popularity during the pandemic proved a healthy retail appetite for crypto

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach

ETFs, however, are more geared towards institutional investors looking for, as Michael Saylor puts it, a regulated “high-bandwidth” channel for investment. Retail crypto trading, which still occupies a legally murky area in the US, does not satisfy that criteria.

Coinbase could still benefit from a possible ETF boom, as its crypto custody business is cited in several ETF filings. This listing means it will take some of the fees that issuers charge clients.

Do you have something to say about the cryptocurrency ETF price wars or anything else? Please write to us or join the discussion on our Telegram channel. You can also catch us on TikTokFacebook, or X (Twitter).

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...